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Financial Data and Key Metrics Changes - The company's Q3 2025 revenue was $5.0 million, down from $5.4 million in Q3 2024, a decrease of $0.4 million primarily due to $0.8 million from discontinued services with two proactive customers [7][10] - Gross profit increased to $2.1 million in Q3 2025 from $1.9 million in Q3 2024, with gross margin improving to 41% from 35% [8][10] - The net loss for Q3 2025 was $3.4 million, or $0.26 per diluted share, compared to a net loss of $2.9 million, or $0.23 per diluted share in Q3 2024 [10][11] - Adjusted EBITDA improved to $0.8 million in Q3 2025 from $0.2 million in Q3 2024 [11] Business Line Data and Key Metrics Changes - PeriShip revenue decreased approximately 14% in Q2 2025 compared to the previous year, but Q3 2025 saw a smaller decline of about 7% due to sales and marketing efforts [4][5] - Operating expenses decreased to $1.7 million in Q3 2025 from $2.5 million in Q3 2024, attributed to the divestiture of the TrustCodes business and cost-cutting measures [10][11] Market Data and Key Metrics Changes - The transition to a new proactive shipping partner is expected to impact Q4 2025 and Q1 2026 revenues, with no specific guidance provided for 2026 at this time [5][9] - The company anticipates remaining cash flow positive for the full year of 2025 despite the transitional revenue impact [12][13] Company Strategy and Development Direction - The company is focused on transitioning to a new proactive shipping partner, which is believed to provide a better platform for sustained organic growth in the long term [5][13] - The management emphasizes the importance of maintaining customer loyalty during the transition and is actively working to facilitate customer shifts to the new partner [19][30] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the transition from the previous shipping partner and the impact on revenue, but expressed optimism about future growth and operational efficiencies [3][13] - The company plans to provide specific guidance for 2026 in the next earnings call, indicating a commitment to transparency and strategic planning [5][30] Other Important Information - The company recognized a one-time non-cash impairment expense of $3.9 million in Q3 2025 related to goodwill and intangible assets in the PeriShip business [9][10] - The cash balance as of September 30, 2025, was $4.0 million, with $1 million available under a line of credit and no outstanding borrowings [11][12] Q&A Session Summary Question: What was the revenue contribution of the proactive business that ended in September? - Management indicated that they do not have a precise figure for the revenue contribution from the proactive business, as it is a dynamic situation with ongoing customer transitions [17][21] Question: Can you provide last year's Q4 revenue contribution from the FedEx business? - Management stated that all proactive customers used FedEx last year, but they cannot provide a specific percentage of Q4 revenue from that business due to customer turnover and ongoing transitions [20][22] Question: What is the status of potential M&A discussions? - Management confirmed ongoing conversations regarding potential acquisitions but noted that timing is difficult to predict [25] Question: How much of the operating expense improvement was due to TrustCodes? - Approximately $500,000 of operating expenses in Q3 2024 were associated with TrustCodes, indicating significant cost reductions in the current period [27]

NASDAQ:VRME Protect your brand. Grow your business. Third Quarter 2025 Investor Conference Call November 17, 2025 www.VerifyMe.com 01 Welcome & Introductions Operations and Strategic Update 02 Financial Review 03 Q&A 04 Closing Remarks 05 Forward Looking Statements NASDAQ:VRME In addition to historical information, this presentation contains statements relating to revenue opportunities, anticipated revenue, profitability of the combined company, future business, financial performance, future catalysts and f ...

Revenue Performance - Revenue for Q3 2025 was $5.0 million, a decrease of 7.4% from $5.4 million in Q3 2024, primarily due to a $0.8 million decrease from discontinued services[6][8] - Net revenue for the three months ended September 30, 2025, was $5,033 thousand, a decrease of 7.4% compared to $5,435 thousand for the same period in 2024[30] Profitability - Gross profit increased to $2.1 million in Q3 2025, resulting in a gross margin of 41%, up from 35% in Q3 2024[9][13] - Gross profit for the three months ended September 30, 2025, was $2,073 thousand, representing a 9.4% increase from $1,895 thousand in the prior year[30] - Adjusted EBITDA improved to $0.8 million in Q3 2025, compared to $0.2 million in Q3 2024, indicating positive operational performance[11][13] - Adjusted EBITDA for the three months ended September 30, 2025, was $832 thousand, significantly higher than $174 thousand in the same period of 2024[33] Net Loss - Net loss for Q3 2025 was ($3.4) million, compared to a net loss of ($2.4) million in Q3 2024, with loss per share of ($0.26) versus ($0.23) in the prior year[10][13] - The net loss for the three months ended September 30, 2025, was $3,356 thousand, compared to a net loss of $2,424 thousand for the same period in 2024, reflecting a 38.5% increase in losses[30] Expenses - Total operating expenses increased to $5,505 thousand for the three months ended September 30, 2025, up from $4,765 thousand in the same period of 2024, marking a 15.5% rise[30] Cash and Liquidity - Cash balance as of September 30, 2025, was $4.0 million, with cash provided by operations of $0.2 million in Q3 2025, compared to $0.0 million in Q3 2024[12][13] - Working capital as of September 30, 2025, was $5.7 million, reflecting the company's liquidity position[12] Strategic Initiatives - The company is pursuing strategic acquisitions to enhance its service offerings and is preparing for organic revenue growth in 2026[4] - The company has established a new partnership with a major parcel carrier in the US, which is expected to support future growth[4] Segment Performance - The Precision Logistics segment accounted for 99% of total revenues in Q3 2025, highlighting its significance to the company's operations[8] - Goodwill and intangible asset impairments in the Precision Logistics segment amounted to $3.9 million in Q3 2025, contributing to the increased net loss[10] Shareholder Information - The company had 12,734,425 shares issued and 12,252,977 shares outstanding as of September 30, 2025, compared to 10,829,908 shares issued and 10,539,441 shares outstanding as of December 31, 2024[27] Accumulated Deficit and Liabilities - The accumulated deficit as of September 30, 2025, was $(89,891) thousand, an increase from $(85,673) thousand as of December 31, 2024[28] - Total liabilities and stockholders' equity as of September 30, 2025, was $13,263 thousand, down from $16,067 thousand as of December 31, 2024[28] Impairments - Goodwill and intangible asset impairment for the three months ended September 30, 2025, was $3,850 thousand, compared to $2,252 thousand in the same period of 2024[30]

分组1 - VerifyMe, Inc. reported a quarterly loss of $0.02 per share, better than the Zacks Consensus Estimate of a loss of $0.04, representing an earnings surprise of +50.00% [1] - The company posted revenues of $5.03 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.92%, although this is a decrease from $5.43 million in the same quarter last year [2] - VerifyMe has surpassed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates two times in the same period [2] 分组2 - The stock has underperformed, losing about 41.5% since the beginning of the year, compared to the S&P 500's gain of 14.6% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $7.47 million, and for the current fiscal year, it is -$0.13 on revenues of $21.34 million [7] - The Zacks Industry Rank for Technology Services is in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Revenue Performance - For the three months ended September 30, 2025, the Precision Logistics segment generated revenue of $4,973,000, a decrease of 6.2% compared to $5,303,000 for the same period in 2024[55]. - The Premium services within the Precision Logistics segment saw revenue decline from $886,000 in Q3 2024 to $809,000 in Q3 2025, representing a decrease of 8.7%[55]. - For the nine months ended September 30, 2025, total revenue was $14,008,000, down from $16,546,000 in the same period of 2024, indicating a decline of 15.4%[55]. - The Proactive services revenue for the nine months ended September 30, 2025, was $11,687,000, compared to $12,587,000 in 2024, reflecting a decrease of 7.1%[55]. - The Authentication segment contributed $113,000 in revenue for the nine months ended September 30, 2025, down from $385,000 in the same period of 2024[55]. - For the three months ended September 30, 2025, the consolidated net revenue was $5,435,000, a decrease of 10.5% compared to $5,303,000 for the same period in 2024[142]. - For the nine months ended September 30, 2025, the consolidated net revenue was $16,546,000, a decrease of 6.5% from $17,688,000 in the same period of 2024[144]. Expenses and Losses - The net loss for the three months ended September 30, 2025, was $2,424,000, compared to a net loss of $3,356,000 for the same period in 2024, representing a 27.7% improvement[142]. - The net loss for the nine months ended September 30, 2025, was $3,323,000, compared to a net loss of $4,218,000 for the same period in 2024, indicating a 21.2% improvement[144]. - Total segment expenses for the three months ended September 30, 2025, were $3,987,000, compared to $4,836,000 in the same period of 2024, indicating a reduction of 17.5%[142]. - The total segment expenses for the nine months ended September 30, 2025, were $7,518,000, compared to $7,260,000 in the same period of 2024, reflecting an increase of 3.6%[144]. Impairments and Amortization - The company recorded a goodwill impairment charge of $1,062 thousand for the Precision Logistics segment during the three and nine months ended September 30, 2025, reducing the net book value to $2,926 thousand[66]. - An intangible asset impairment charge of $2,788 thousand was recorded during the three and nine months ended September 30, 2025, indicating that the carrying value of long-lived assets exceeded their estimated fair values[73]. - Amortization expense for intangible assets was $271 thousand for the three months ended September 30, 2025, and $819 thousand for the nine months ended September 30, 2025[77]. - The company expects to record amortization expense of $137 thousand in the remaining three months of 2025 and a total of $2,317 thousand over the next five years[78]. Share-Based Compensation - The total unrecognized share-based compensation cost related to unvested performance-based restricted stock units was $199 thousand, expected to be recognized over a weighted-average period of less than a year[106]. - The Company granted 110,773 restricted stock units with a grant date fair value of $1.52, while 155,038 units vested and 20,334 units were forfeited as of September 30, 2025[103]. - The Company had a total of 209,137 unvested restricted stock units with an average grant date fair value of $1.39 as of September 30, 2025[103]. - The Company issued 60,000 shares of restricted common stock valued at $41 thousand for consulting services on March 31, 2025, and an additional 60,000 shares valued at $45 thousand on September 30, 2025[83]. - The company expensed $92 thousand related to restricted stock units for the three months ended September 30, 2025[80]. Financial Position and Debt - As of September 30, 2025, the contract asset balance was $381 thousand, down from $786 thousand in 2024, with additions of $4,967 thousand and reclassifications to accounts receivable of $(5,319) thousand during the period[60]. - As of September 30, 2025, the Company had $0 outstanding on the revolving line of credit (RLOC) of $1 million[120]. - The Company entered into a Convertible Note Purchase Agreement for $1.1 million, with $400 thousand held by related parties as of September 30, 2025[122]. - For the nine months ended September 30, 2025, interest expense related to the convertible debt was $46 thousand, down from $66 thousand for the same period in 2024[122]. - The Company has a Master Loan Agreement with ZenCredit Ventures for up to $2 million at an annual interest rate of 16%, with $2 million loaned as of August 11, 2025[123]. - The PNC Facility includes a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year[117]. - The Company had no taxes payable as of September 30, 2025, or December 31, 2024[124]. Operational Insights - The Company operates two reportable segments: Precision Logistics and Authentication, with the former accounting for nearly all of the revenue[28]. - The Company utilizes a proprietary software platform for predictive analytics in its Precision Logistics segment, enhancing service delivery and customer experience[28]. - One customer represented 12% of revenues for the nine months ended September 30, 2025, compared to 19% for the same period in 2024[134]. - One vendor accounted for 99% of transportation costs in the Precision Logistics segment during the three and nine months ended September 30, 2025[135]. - The company recognized a loss of $0.1 million on the sale of Trust Codes Global, which was sold for $1 NZD[61]. Stock and Shareholder Actions - As of September 30, 2025, the Company had 481,448 shares held in treasury valued at approximately $502 thousand, compared to 290,467 shares valued at $480 thousand as of December 31, 2024[88]. - The Company repurchased 272,177 shares for $221 thousand during the nine months ended September 30, 2025, under a share repurchase program approved in December 2023[89]. - As of September 30, 2025, there were no outstanding stock options, with a balance of 221,000 options as of December 31, 2024, all of which were forfeited or cancelled[97][99]. - The Company had 1,555,207 warrants outstanding as of September 30, 2025, with an average exercise price of $3.95, following the exercise of 1,461,896 warrants at an exercise price of $3.22[107]. - The Company has not sold any shares of common stock through the At-the-Market Sales Agreement, which has an aggregate offering price of $15.8 million[113][115]. Other Notable Events - The Company is currently evaluating the potential effects of new accounting standards on its financial statement disclosures, including ASU 2023-09 and ASU 2024-03[33][35]. - The company issued 70,000 restricted stock awards on October 9, 2025, vesting on October 9, 2026, to two members of the Board of Directors[146]. - After the third quarter ended September 30, 2025, the company discontinued one foreign patent application and abandoned one US and one European patent due to lack of planned use[146].

Core Viewpoint - VerifyMe, Inc. is scheduled to report its third quarter financial results on November 17, 2025, and will host an investor conference call to discuss these results [1][8]. Company Overview - VerifyMe, Inc. operates in the logistics sector, providing specialized services for time and temperature-sensitive products, as well as brand protection and enhancement solutions [3][7]. - The company is listed on NASDAQ under the ticker symbol VRME and is headquartered in Lake Mary, Florida [6][7]. Conference Call Details - The investor conference call will take place at 9:00 a.m. Eastern Time and will include prepared remarks followed by a Q&A session with the executive management team [1][2]. - Participants can access the call via a webcast or by phone, with options for pre-registration available [2][6]. - Presentation slides will be made available on the company's investor website the morning of the call and will be archived for 90 days [2][6].

Core Insights - VerifyMe, Inc. (NASDAQ:VRME) is considered a hidden penny stock with potential investment opportunities due to recent developments in the company [1][3]. Management Changes - Dr. Arthur Laffer has resigned as a director of VerifyMe, effective immediately, with no reported disagreements with the company [1]. - David Edmonds will join the audit committee starting Friday [1]. Financial Performance - During the latest earnings call, the leadership expressed confidence in the company's performance, attributing it to PeriShip's focus [2]. - A 14% decline in PeriShip revenue was reported, but new customer sales and expanded revenues from existing customers were noted [2]. Strategic Developments - VerifyMe announced a collaboration with two freight carriers, moving away from a single-carrier strategy, which is expected to enhance organic revenue growth by 2026 [3]. - The integration of technology and services with the new freight carriers will take a couple of months [3]. Company Overview - VerifyMe, based in Lake Mary, Florida, provides brand protection and precision logistics solutions, operating in two main segments: Precision Logistics and Authentication [4].

Core Insights - VerifyMe, Inc. is transitioning its Proactive services customers from FedEx to a new shipping partner effective September 24, 2025, aiming to provide cost savings during the peak holiday season while maintaining service quality [2][3] Company Overview - VerifyMe, Inc. operates in the logistics and supply chain sector, focusing on time and temperature-sensitive products, offering services such as traceability, authentication, and anti-counterfeiting [3] Service Changes - The top 5% of customers in PeriShip's Precision Logistics business account for over 60% of Proactive services revenue, with an average customer relationship tenure exceeding 7 years [2] - The company expects the new shipping partnership to enhance customer savings and service continuity during the holiday season [2] Financial Context - The transition to a new shipping partner is not anticipated to affect the Premium services provided to existing FedEx customers [2]

PART I - FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, cash flows, and stockholders' equity, along with detailed notes explaining significant accounting policies, revenue recognition, business combinations, intangible assets, equity, debt, income taxes, leases, concentrations, segment reporting, and subsequent events [Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Consolidated Balance Sheets (Unaudited) (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Cash and cash equivalents | $6,067 | $2,823 | +$3,244 | | Accounts receivable, net | $1,100 | $2,636 | -$1,536 | | Total Current Assets | $7,867 | $6,362 | +$1,505 | | Total Assets | $17,166 | $16,067 | +$1,099 | | Term note, current | $- | $500 | -$500 | | Accounts payable | $1,559 | $2,971 | -$1,412 | | Total Current Liabilities | $1,937 | $4,239 | -$2,302 | | Total Liabilities | $2,730 | $5,853 | -$3,123 | | Total Stockholders' Equity | $14,436 | $10,214 | +$4,222 | [Consolidated Statements of Operations (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) Consolidated Statements of Operations (Unaudited) (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net Revenue | $4,520 | $5,352 | -15.5% | $8,975 | $11,111 | -19.3% | | Cost of Revenue | $2,929 | $3,262 | -10.2% | $5,894 | $6,761 | -12.8% | | Gross Profit | $1,591 | $2,090 | -23.9% | $3,081 | $4,350 | -29.2% | | Total Operating Expenses | $1,913 | $2,626 | -27.2% | $3,996 | $5,533 | -27.8% | | Net Loss | $(291) | $(346) | -15.9% | $(862) | $(899) | -4.1% | | Basic/Diluted EPS | $(0.02) | $(0.03) | -33.3% | $(0.07) | $(0.09) | -22.2% | [Consolidated Statements of Comprehensive Loss (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20(Unaudited)) Consolidated Statements of Comprehensive Loss (Unaudited) (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Loss | $(291) | $(346) | $(862) | $(899) | | Change in fair value of interest rate, Swap | $- | $2 | $(12) | $5 | | Foreign currency translation adjustments | $- | $18 | $- | $(49) | | Total Comprehensive Loss | $(291) | $(326) | $(874) | $(943) | [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statements of Cash Flows (Unaudited) (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $306 | $312 | | Net cash used in investing activities | $(332) | $(191) | | Net cash provided by (used in) financing activities | $3,270 | $(313) | | Net increase (decrease) in cash and cash equivalents | $3,244 | $(195) | | Cash and cash equivalents, end of period | $6,067 | $2,900 | - Proceeds from Warrants Exercise contributed **$4,348 thousand** to financing activities in the six months ended June 30, 2025[22](index=22&type=chunk) - Repayment of debt and line of credit amounted to **$875 thousand** in the six months ended June 30, 2025[22](index=22&type=chunk) [Consolidated Statements of Stockholders' Equity (Unaudited)](index=10&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Unaudited)) Consolidated Statements of Stockholders' Equity (Unaudited) (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common stock | $13 | $11 | | Additional paid in capital | $101,392 | $96,344 | | Treasury stock | $(434) | $(480) | | Accumulated deficit | $(86,535) | $(85,673) | | Total Stockholders' Equity | $14,436 | $10,214 | - Warrants exercise contributed **$4,348 thousand** to additional paid-in capital[27](index=27&type=chunk) - Convertible note conversion added **$360 thousand** to total equity[27](index=27&type=chunk) - The company repurchased **201,486 shares** for **$153 thousand** during the six months ended June 30, 2025[26](index=26&type=chunk)[27](index=27&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%201%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - VerifyMe, Inc. is a logistics company specializing in time and temperature sensitive products and brand protection solutions, operating through Precision Logistics and Authentication segments[31](index=31&type=chunk)[150](index=150&type=chunk) - Precision Logistics, through its subsidiary PeriShip Global, accounts for nearly all of VerifyMe's revenue[31](index=31&type=chunk)[150](index=150&type=chunk) - The Company is evaluating the potential effects of new accounting standards ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning **January 1, 2025**, and **December 15, 2026**, respectively[36](index=36&type=chunk)[38](index=38&type=chunk) [NOTE 2 – REVENUE](index=15&type=section&id=NOTE%202%20%E2%80%93%20REVENUE) Revenue (in thousands) | Revenue (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :--------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Precision Logistics | $4,493 | $5,244 | -14.3% | $8,922 | $10,858 | -17.8% | | Proactive services | $3,829 | $3,945 | -2.9% | $7,523 | $8,170 | -7.9% | | Premium services | $664 | $1,299 | -48.9% | $1,399 | $2,688 | -47.9% | | Authentication | $27 | $108 | -75.0% | $53 | $253 | -79.0% | | Total Revenue | $4,520 | $5,352 | -15.5% | $8,975 | $11,111 | -19.3% | - The decrease in Authentication segment revenue is primarily due to the divestiture of the Trust Codes Global business in **December 2024**[169](index=169&type=chunk)[178](index=178&type=chunk) - Unbilled revenue (contract assets) decreased from **$733 thousand** at January 1, 2025, to **$324 thousand** at June 30, 2025[63](index=63&type=chunk) [NOTE 3 – BUSINESS COMBINATIONS](index=16&type=section&id=NOTE%203%20%E2%80%93%20BUSINESS%20COMBINATIONS) - VerifyMe divested its Trust Codes Global business (Authentication segment) on **December 8, 2024**, for **$1 NZD**, resulting in a **$0.1 million loss**[64](index=64&type=chunk) [NOTE 4 – INTANGIBLE ASSETS AND GOODWILL](index=16&type=section&id=NOTE%204%20%E2%80%93%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) Intangible Assets and Goodwill (in thousands) | Asset Category (in thousands) | June 30, 2025 (Net Carrying Amount) | December 31, 2024 (Net Carrying Amount) | | :---------------------------- | :---------------------------------- | :-------------------------------------- | | Goodwill | $3,988 | $3,988 | | Patents and Trademarks | $839 | $882 | | Customer Relationships | $1,252 | $1,344 | | Developed Technology | $1,470 | $1,732 | | Internally Used Software | $1,411 | $1,211 | | Non-Compete Agreement | $69 | $88 | | Deferred Implementation | $101 | $108 | | Total Intangible Assets, Net | $5,142 | $5,365 | - Amortization expense for intangible assets was **$548 thousand** for the six months ended June 30, 2025[75](index=75&type=chunk) - The Company expects to record **$567 thousand** in amortization expense for the remaining six months of 2025[77](index=77&type=chunk) [NOTE 5 – STOCKHOLDERS' EQUITY](index=18&type=section&id=NOTE%205%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) - The Company expensed **$96 thousand** for restricted stock awards and **$410 thousand** for restricted stock units for the six months ended June 30, 2025[78](index=78&type=chunk)[79](index=79&type=chunk) - **$350 thousand** of convertible notes were converted into **313,520 shares** of common stock as of January 21, 2025[80](index=80&type=chunk) - The Company repurchased **201,486 shares** for **$153 thousand** under its share repurchase program during the six months ended June 30, 2025[88](index=88&type=chunk)[214](index=214&type=chunk) - As of June 30, 2025, **410,757 shares** were held in treasury, valued at approximately **$434 thousand**[87](index=87&type=chunk) [NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS](index=19&type=section&id=NOTE%206%20%E2%80%93%20STOCK%20OPTIONS%2C%20RESTRICTED%20STOCK%20AND%20WARRANTS) Equity Instrument Details | Equity Instrument | June 30, 2025 (Number of Shares/Units) | Weighted-Average Exercise Price / Grant Date Fair Value | Unrecognized Compensation Cost (in thousands) | | :---------------- | :------------------------------------- | :------------------------------------------------------ | :-------------------------------------------- | | Stock Options Outstanding | 140,000 | $3.50 | $0 | | Unvested Restricted Stock Awards | 0 | $- | $0 | | Unvested Time-Based Restricted Stock Units | 224,471 | $1.41 | $259 | | Unvested Performance-Based Restricted Stock Units | 1,321,591 | $1.15 | $513 | | Warrants Outstanding | 1,555,207 | $3.95 | N/A | - On January 13, 2025, the Company entered into a warrant inducement agreement, resulting in **$4.3 million** net proceeds from warrant exercises and the issuance of new warrants to purchase **1,461,896 shares** at **$4.00 per share**[109](index=109&type=chunk)[110](index=110&type=chunk) - The fair value of the new warrants was estimated at **$3,971 thousand** and recorded in additional paid-in capital[110](index=110&type=chunk) - The Company entered into an At-The-Market Sales Agreement (ATM) on **March 6, 2025**, to sell up to **$15.8 million** of common stock, but no shares have been sold through the ATM as of June 30, 2025[113](index=113&type=chunk)[115](index=115&type=chunk) [NOTE 7—DEBT](index=23&type=section&id=NOTE%207%E2%80%94DEBT) - The Term Note balance of **$875 thousand** was paid in full on **January 21, 2025**[119](index=119&type=chunk) - The revolving line of credit (RLOC) had **$0 outstanding** as of June 30, 2025[120](index=120&type=chunk) - The interest rate swap agreement was terminated on **January 21, 2025**, with **$12 thousand** reclassified from accumulated other comprehensive loss[121](index=121&type=chunk) - Convertible debt outstanding was **$750 thousand** as of June 30, 2025, including **$450 thousand** held by related parties[122](index=122&type=chunk) [NOTE 8—INCOME TAXES](index=24&type=section&id=NOTE%208%E2%80%94INCOME%20TAXES) - No taxes payable as of June 30, 2025, or December 31, 2024[123](index=123&type=chunk) - No tax benefit recognized for the six months ended June 30, 2025, due to uncertainty of realizing deferred tax assets, with a valuation allowance in place[124](index=124&type=chunk)[126](index=126&type=chunk) - Utilization of net operating loss (NOL) carryforwards may be limited by Section 382 of the IRC due to potential ownership changes[125](index=125&type=chunk) [NOTE 9– LEASES](index=24&type=section&id=NOTE%209%E2%80%93%20LEASES) Lease Metrics (in thousands) | Lease Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Operating Lease right-of-use asset | $89 | $236 | | Total operating lease liabilities | $94 | $247 | | Cash paid for operating lease liabilities | $39 | $126 | | Weighted-average remaining lease term (years) | 1.8 | 2.3 | | Weighted average discount rate | 7.4% | 6.0% | - Total lease costs for the six months ended June 30, 2025, were **$47 thousand**, compared to **$104 thousand** in the prior year[130](index=130&type=chunk) [NOTE 10– CONCENTRATIONS](index=26&type=section&id=NOTE%2010%E2%80%93%20CONCENTRATIONS) - One customer accounted for **13% of revenues** for the six months ended June 30, 2025[132](index=132&type=chunk) - One vendor accounted for **99% of transportation costs** in the Precision Logistics segment for the three and six months ended June 30, 2025[132](index=132&type=chunk) - Two customers comprised **26% of accounts receivable, net**, as of June 30, 2025[133](index=133&type=chunk) [NOTE 11 – SEGMENT REPORTING](index=26&type=section&id=NOTE%2011%20%E2%80%93%20SEGMENT%20REPORTING) Segment Reporting (in thousands) | Metric (in thousands) | Precision Logistics (6 Months Ended June 30, 2025) | Authentication (6 Months Ended June 30, 2025) | Precision Logistics (6 Months Ended June 30, 2024) | Authentication (6 Months Ended June 30, 2024) | | :-------------------- | :------------------------------------------------- | :-------------------------------------------- | :------------------------------------------------- | :-------------------------------------------- | | Net Revenue | $8,922 | $53 | $10,858 | $253 | | Cost of Revenue | $5,881 | $13 | $6,732 | $29 | | Gross Profit | $3,041 | $40 | $4,126 | $224 | | Total Segment Expenses | $2,474 | $(50) | $2,583 | $935 | | Segment Income | $567 | $90 | $1,543 | $(711) | - Precision Logistics segment offers value-added services for time and temperature sensitive parcel management, utilizing a proprietary IT platform for predictive analytics and real-time visibility[135](index=135&type=chunk)[150](index=150&type=chunk) - Authentication segment specializes in anti-counterfeit and brand protection[136](index=136&type=chunk)[153](index=153&type=chunk) [NOTE 12 – SUBSEQUENT EVENTS](index=29&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENTS) - On **August 8, 2025**, VerifyMe entered a loan agreement with ZenCredit Ventures, LLC, to loan up to **$2 million** at **16% annual interest**[144](index=144&type=chunk) - An initial loan of **$2 million** was disbursed to ZenCredit on **August 11, 2025**[144](index=144&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews VerifyMe's business, market opportunities, financial performance, liquidity, and capital resources for the periods ended June 30, 2025 [Overview](index=30&type=section&id=Overview) - VerifyMe operates two segments: Precision Logistics (majority revenue, sensitive parcel management with predictive analytics) and Authentication (anti-counterfeit and brand protection)[150](index=150&type=chunk) - Precision Logistics offers "ProActive Service" (carrier service + proactive logistics) and "Premium Service" (white-glove monitoring, predictive analytics, web portal, service center)[152](index=152&type=chunk) - The PeriTrack® customer dashboard provides real-time data, in-depth shipping activity insights, and tools for perishable goods shippers[151](index=151&type=chunk)[157](index=157&type=chunk) [Opportunities](index=31&type=section&id=Opportunities) - Proprietary "Predictive Analytics" technology, integrating real-time meteorology, traffic, and power grid data, provides a competitive advantage by predicting and mitigating shipping issues[154](index=154&type=chunk) - Significant growth opportunities exist in small and medium-sized agriculture, food and beverage companies, and the pharmaceutical and healthcare industries[154](index=154&type=chunk) - The current economic environment may encourage companies to outsource precision logistics services, benefiting VerifyMe's cost-competitive offerings[155](index=155&type=chunk) [Partnerships](index=31&type=section&id=Partnerships) - Precision Logistics has a direct partnership with a major global carrier, providing data feeds for its proprietary logistics optimization software[156](index=156&type=chunk) - The strategic partner is shifting to offer its own solutions, potentially impacting VerifyMe's "Premium service" but not "Proactive services," where direct customer focus is expected to drive growth[156](index=156&type=chunk) - The Authentication segment has a contract with HP Indigo and a strategic partnership with INX for anti-counterfeit solutions[159](index=159&type=chunk) [Current Economic Environment](index=33&type=section&id=Current%20Economic%20Environment) - Softening demand for high-end perishable items is observed due to reduced discretionary spending[161](index=161&type=chunk) - Cost-cutting measures by major global carriers could benefit outsourced service providers, creating growth opportunities for VerifyMe's Precision Logistics segment, particularly with small and medium-sized businesses[161](index=161&type=chunk) - Changes in U.S. or international trade policy, including tariffs, could further weaken business conditions[161](index=161&type=chunk) [Seasonality](index=33&type=section&id=Seasonality) - Net revenues from the Precision Logistics segment are generally higher in the **fourth quarter** due to increased holiday shipments[162](index=162&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) - PeriShip Global signed agreements with UPS on **July 29, 2025**, for digital channel program access and API integration, offering promotional rates for time-sensitive and perishable shipments[163](index=163&type=chunk) - On **August 11, 2025**, VerifyMe loaned **$2 million** to ZenCredit Ventures, LLC, under a Master Loan Agreement with a **16% annual interest rate**[164](index=164&type=chunk) - The Company received a Nasdaq deficiency notice on **April 3, 2025**, for failing to meet the **$1 minimum bid price rule**, with a compliance period until **September 30, 2025**[165](index=165&type=chunk) - The Company's Uplist Warrants (VRMEW) expired on **June 23, 2025**, and Nasdaq formalized their suspension[167](index=167&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) [Comparison of the three months ended June 30, 2025, and 2024](index=34&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%2C%20and%202024) Financial Performance (Q2 2025 vs Q2 2024, in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Total Revenue | $4,520 | $5,352 | $(832) | -15.5% | | Gross Profit | $1,591 | $2,090 | $(499) | -23.9% | | Gross Margin | 35% | 39% | -4% pts | | | Segment Management and Technology Expenses | $920 | $1,517 | $(597) | -39.4% | | General and Administrative Expenses | $716 | $894 | $(178) | -19.9% | | Sales and Marketing Expenses | $272 | $210 | $62 | +29.5% | | Interest Income (Expense), net | $32 | $(42) | $74 | N/A | | Net Loss | $(291) | $(346) | $55 | -15.9% | | Basic/Diluted EPS | $(0.02) | $(0.03) | $0.01 | -33.3% | - Revenue decrease attributed to **$585 thousand** from a discontinued Premium services contract and **$495 thousand** from two discontinued Proactive services customers[169](index=169&type=chunk) - Gross profit decrease is linked to lower Premium services revenue (higher margins) and the divestiture of Trust Codes Global[170](index=170&type=chunk) [Comparison of the six months ended June 30, 2025, and 2024](index=35&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%2C%20and%202024) Financial Performance (H1 2025 vs H1 2024, in thousands) | Metric (in thousands) | H1 2025 | H1 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Total Revenue | $8,975 | $11,111 | $(2,136) | -19.2% | | Gross Profit | $3,081 | $4,350 | $(1,269) | -29.2% | | Gross Margin | 34% | 39% | -5% pts | | | Segment Management and Technology Expenses | $1,846 | $2,860 | $(1,014) | -35.5% | | General and Administrative Expenses | $1,572 | $2,015 | $(443) | -22.0% | | Sales and Marketing Expenses | $568 | $598 | $(30) | -5.0% | | Interest Income (Expense), net | $54 | $(80) | $134 | N/A | | Net Loss | $(862) | $(899) | $37 | -4.1% | | Basic/Diluted EPS | $(0.07) | $(0.09) | $0.02 | -22.2% | - Revenue decrease attributed to decreased demand in Proactive services, a customer's shift to their own cold chain strategy, and a discontinued Premium services contract[178](index=178&type=chunk) - Gross profit decrease is linked to lower Premium services revenue (higher margins) and the divestiture of Trust Codes Global[179](index=179&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash provided by operating activities was **$306 thousand** for the six months ended June 30, 2025[186](index=186&type=chunk) - Net cash used in investing activities increased to **$332 thousand**, mainly due to increased capitalized software costs[186](index=186&type=chunk) - Net cash provided by financing activities was **$3,270 thousand**, primarily from **$4.7 million** in gross proceeds from warrant exercises, partially offset by share repurchases and debt repayment[187](index=187&type=chunk)[188](index=188&type=chunk) - The Company believes its cash and cash equivalents will fund operations beyond the next **12 months** and may pursue additional debt or equity for organic growth and acquisitions[195](index=195&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company has no off-balance sheet arrangements[196](index=196&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No critical accounting policies and estimates were discussed in this section[197](index=197&type=chunk) [Recently Adopted Accounting Pronouncements](index=37&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) - Recently adopted accounting pronouncements are detailed in Note 1 – Summary of Significant Accounting Policies[198](index=198&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that it is "Not Applicable," indicating no material market risk disclosures for the period - The Company has no material quantitative and qualitative disclosures about market risk for the period[199](index=199&type=chunk) [ITEM 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were effective as of **June 30, 2025**[200](index=200&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[201](index=201&type=chunk) PART II - OTHER INFORMATION [ITEM 1. Legal Proceedings](index=39&type=section&id=ITEM%201.%20Legal%20Proceedings) The Company reported no legal proceedings for the period - There are no legal proceedings to report[204](index=204&type=chunk) [ITEM 1A. Risk Factors](index=39&type=section&id=ITEM%201A.%20Risk%20Factors) The Company disclosed a new risk factor related to its non-compliance with Nasdaq's minimum bid price rule, which could lead to delisting and negatively impact its stock and ability to raise capital - The Company is not in compliance with Nasdaq's Minimum Bid Price Rule (**$1 per share**) as of **April 3, 2025**, risking delisting[206](index=206&type=chunk) - Potential delisting could negatively impact common stock market price and liquidity, reduce capital raising ability, and lead to loss of business partner confidence and institutional investor interest[207](index=207&type=chunk)[208](index=208&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the issuance of common stock for consulting services under an unregistered exemption and details the Company's share repurchase program activities during the quarter - On **June 30, 2025**, **60,000 common shares** were issued for consulting services under a Section 4(a)(2) exemption[207](index=207&type=chunk) Share Repurchase Program (in thousands) | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----- | :--------------------- | :--------------------------- | :------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | 04/01/2025-04/30/2025 | - | - | - | $483 | | 05/01/2025-05/31/2025 | 89,992 | $0.74 | 89,992 | $417 | | 06/01/2025-06/30/2025 | 111,494 | $0.78 | 111,494 | $330 | | Total | 201,486 | $0.76 | 201,486 | $330 | - The share repurchase program, extended through **December 31, 2025**, allows for repurchases up to **$0.5 million** at prices not exceeding **$1.00 per share**[214](index=214&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=40&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[210](index=210&type=chunk) [ITEM 4. Mine Safety Disclosures](index=40&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable to the Company[211](index=211&type=chunk) [ITEM 5. Other Information](index=40&type=section&id=ITEM%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the three months ended June 30, 2025 - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2025[212](index=212&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including amended bylaws, certifications, and XBRL documents - The exhibits include amended bylaws, CEO/CFO certifications (Sarbanes-Oxley Act), and XBRL instance and taxonomy documents[213](index=213&type=chunk) SIGNATURES - The report was signed by Adam Stedham, CEO and President, and Jennifer Cola, CFO, on **August 13, 2025**[217](index=217&type=chunk)